Two partners at KPMG quit ahead of disciplinaries

Image: RF123

KPMG South Africa on Saturday announced that two of its partners had resigned with immediate effect when faced with disciplinary charges brought against them.

The resignations by Sipho Malaba and Dumi Tshuma were tendered on Friday.

"Their resignations have been accepted‚" the company said.

"Both cases are conduct charges‚ connected to VBS bank and include‚ but are not limited to‚ failure by the partners to comply with the firm’s policies and procedures regarding the disclosure of relevant financial interests‚" said KPMG. "When VBS bank recently went into curatorship‚ information arose in relation to these partners that prompted KPMG to launch an independent investigation‚ conducted by Bowmans. That investigation is ongoing and further action will be taken as appropriate."

KPMG South Africa chief executive Nhlamulo Dlomu commented: “This has been a very disappointing episode for KPMG. There can be no tolerance‚ however‚ of any conduct that compromises our reputation and we have moved decisively to deal with the situation.”

Earlier this week‚ BusinessLIVE reported that KPMG had raised no red flags with the audit regulator over VBS Mutual Bank and it did not report any unlawful practices during its decade-long audit of Gupta-family companies.

Auditors are required by law to blow the whistle on "reportable irregularities"‚ which are unlawful acts committed by management that could cause material financial loss to an entity‚ are fraudulent or represent a breach of fiduciary duties. They do this by filing a report with the Independent Regulatory Board for Auditors (Irba).

Despite VBS’s curator being unable to confirm the existence of R900-million in deposits and flagging related-party fraudulent transactions‚ KPMG‚ which signed off on VBS’s accounts for the year to March 2017‚ had not filed any "reportable irregularities" with Irba‚ the regulator confirmed on Thursday.

Malaba‚ the partner on the VBS audit‚ had been suspended pending the outcome of an investigation.

BusinessLIVE stated this was the latest blow to hit the big four audit firm‚ which is the subject of Irba-initiated investigations into its work for Gupta family companies and the South African Revenue Service.

On Friday‚ meanwhile‚ the South African Reserve Bank announced it had commissioned a forensic probe into VBS Mutual Bank‚ after placing the bank under curatorship in March when it emerged the bank was facing a severe liquidity crisis and could not repay deposits as and when required. The investigation now under way follows a curator's report that signalled possible fraudulent reporting and transactions to extract money from the bank in order to further the personal interests of certain individuals and companies.

Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.